Houghton Mifflin Harcourt, a Boston-based preK-12 education content and technology provider, expects to cut 8 percent of its workforce by the end of the year—totalling as many as 280 employees. The cuts are part of what the company calls a “strategic transformation” to simplify its business.
Houghton Mifflin expects to spend about $11 million to $13 million in severance and benefit costs for the employees, according to documents filed with the U.S. Securities and Exchange Commision on Thursday. The company did not report how much in savings it will see from the cuts. As of Dec. 31, the company had about 3,600 employees.
The company will also spend $1 million to $3 million in consolidating office space and will reduce spending on content development by 20 percent from 2020 to 2023.
The news came during a pre-planned investor event in New York on Thursday, where Houghton Mifflin, also called HMH, announced preliminary results for its upcoming third quarter earnings report. It will announce those earnings in full on Oct. 31. Its third quarter ended on Sept. 30.
Jeffrey Silber, managing director and senior research analyst at investment bank BMO Capital Markets, wrote in a report that the company’s expected net sales of $563 million is actually less than what Wall Street expects.
But more importantly, HMH expects higher billings and free cash flow—the cash generated after paying to support operations and maintain property—than what Wall Street predicts. HMH reports expected third quarter billings of $746 million and free cash flow of $358 million. “The stock should react positively,” Silber said.
